Higher Gold Prices, Weak Rand Boost South African Miners

By Ben Levisohn

South African gold miners are having another a great day–and it’s not just the rising price of gold that is sending their shares higher. The South African miners are also getting a boost from the falling rand. The reason: A falling currency makes gold worth more in local terms.

Associated Press

Bloomberg explains:

The rand, the worst performer among 16 major currencies tracked by Bloomberg after the Japanese yen this year, weakened beyond 10 per dollar for the first time since 2009 today, and last traded at 9.9928. The spot price of gold rose as much as 1.3 percent, the most in a week, and traded 0.5 percent higher at $1,400.03 per ounce.

“The rand, which has underpinned them all week, is setting fresh lows today,” Ryan Wibberley, a Cape Town-based trader at Investec Asset Management, said by phone today. “The gold miners are underpinned by this persistent rand weakness, the rand-price of gold is up almost 10 percent in the last two weeks.”

Johannesburg-based Harmony Gold (HMY), one of the three biggest gold miners, is more geared to the rand-price of gold than competitors with operations in other countries, Wibberley said.

Harmony has gained 7.7% to $4.08, whileSibanye Gold(SBGL), which also owns primarily South African assets, has gained 5% to $3.18. Gold miners with more international exposure have performed less well: Gold Fields (GFI) has ticked up 1.5% to $6.09, while AngloGold Ashanti (AU) has jumped 2.4% to $17.16. The Market Vectors Gold Miner ETF (GDX), by comparison, has gained 3% to $29.36.

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Barron’s veteran Dimitra DeFotis has been blogging about emerging market investing since traveling to India and Turkey. Based in New York, she previously wrote for Barron’s about U.S. equity investing, including cover stories and roundtables on energy themes. Dimitra was among the first digital journalists at the Chicago Tribune and started her career as a police reporter at the Daily Herald in the Chicago suburbs. Dimitra holds degrees from the University of Illinois and Columbia University, where she was a Knight-Bagehot Fellow in the business and journalism schools. She studies multiple languages and photography.